Check out XBLA for some great co-op games. Splosion Man, Castle Crasher, Lara Croft GoL are all really fun to play co-op. They are fairly basic to pick up and there isn't too much depth to the gameplay, but the difficulty scales really well.

Outdated graphics is a strange thing to say about Bioshock. Still looks absolutely gorgeous.

One of the best next-gen games still IMO, great story and character development. Rapture is a wonderful creation in itself, it's a game that everybody should play.

I also thought it started poorly. The first hour or so nothing really happens, and you feel as if you're continually being pandered to even though you don't need to be. It turns out that the first couple of hours of the game are basically an introduction to the game however, because once it gets started it changes dramatically.

You have to stick with it because IMO it's a sensational game, and a really impressive achievement.